Bitcoin’s price is expected to reach $200,000 by the end of 2025, driven by unprecedented demand from institutional players, according to Bernstein analysts Gautam Chhugani and Mahika Sapra. The analysts have updated their previous estimate of $150,000 for the world's largest cryptocurrency.

Analysts attribute this bullish outlook to the growth in spot bitcoin exchange-traded funds (ETFs) managed by BlackRock, Fidelity, and Franklin Templeton. They project that these ETFs will manage around $190 billion in assets by 2025, up from the current $60 billion. 

The recent bitcoin halving event, which reduced the miners’ block reward from 6.25 BTC to 3.125 BTC, has further constrained the supply of new bitcoin. This reduction in supply, combined with increasing demand, is expected to significantly impact Bitcoin’s price. 

The analysts highlight that the new supply of bitcoin has fallen from an average of 900 BTC per day to 450 BTC per day.

Price Prediction Model

Chhugani and Sapra predict that bitcoin could rally to 1.5 times its marginal cost of production by mid-2025, implying a cycle high of $200,000. They base this prediction on historical price movements, noting that Bitcoin has previously rallied to multiple times its marginal cost of production. 

For instance, Bitcoin peaked in 2017 at five times the marginal costs of production and bottomed in 2018 at 0.8 times. In 2021, it rose to around 2.3 times the marginal cost before bottoming at 0.7 times in 2022.

Long-Term Outlook

Beyond 2025, Bernstein analysts are even more optimistic. They estimate that bitcoin could reach $500,000 by the end of 2029 and $1 million by 2033. This long-term forecast is based on continued institutional adoption and the constrained supply dynamics of bitcoin.

As of now, bitcoin is trading at $67,123. It has surged about 70% to $66,900 since the beginning of the year, reaching a new all-time high of $73,700 in March. The rally has strengthened the confidence of Bitcoin bulls, with some predicting even higher milestones by the end of the year.

Mike Novogratz, founder and CEO of Galaxy Digital, has also recently forecasted that Bitcoin could hit $100,000 by the end of 2024.